EXHIBIT 2.15
AFFILIATION AGREEMENT AND AGREEMENT AND PLAN OF MERGER
THIS AFFILIATION AGREEMENT AND AGREEMENT AND PLAN OF MERGER
is entered into as of the 21st day of January, 1998, by and among
Omega Orthodontics of Woodland Hills, Inc., a Delaware
corporation ("Subsidiary" or "Surviving Entity"), Omega
Orthodontics, Inc., a Delaware corporation ("OMEGA"), Azani
Dental Services, Inc., a Delaware corporation (the "MSO"), Xxxxxx
Xxxxx, D.D.S. ("Xx. Xxxxx") who is duly licensed to practice
orthodontics in the State of California (the "State") and Xxxxxx
Xxxxx, D.D.S., Inc., a California professional dental corporation
(the "Orthodontic Entity").
RECITALS
A. OMEGA and its subsidiaries, including the Subsidiary,
provide professional management and marketing services to
orthodontic practices in the United States, which services
include providing practice management systems, office space,
equipment, furnishings and active administrative personnel
necessary for the operation of orthodontic practices, and which
services are provided directly or indirectly through management
service organizations.
B. The MSO provides management services to the Orthodontic
Entity, which owns and operates an orthodontic practice (the
"Practice") with offices located at 00000 Xxxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxxxxxxx 00000 (the "Orthodontic Offices") and
furnishes orthodontic care to the general public through the
services of Xx. Xxxxx affiliated with the Orthodontic Entity.
C. Xx. Xxxxx presently holds 100% of the issued and
outstanding capital stock of the MSO (the issued and outstanding
capital stock is hereafter referred to herein as the "Interests")
and 100% of the issued and outstanding capital stock of the
Orthodontic Entity.
D. OMEGA has conducted a review of the Orthodontic
Entity, and has reviewed the Orthodontic Entity's unaudited
financial and operations statement provided by Xx. Xxxxx (the
"Financial Statement"), a copy of which is attached hereto as
Exhibit A . Based on its review of the Orthodontic Entity and
the Financial Statement, OMEGA has issued the report (the
"Report"), a copy of which has been furnished to the Orthodontic
Entity. The Orthodontic Entity and Xx. Xxxxx have reviewed the
Report and OMEGA's literature, and agree with the Report and the
concepts of OMEGA's Exceptional Practice.
E. Subject to the terms and conditions of this Agreement,
OMEGA and Xx. Xxxxx have determined that it is in the best
interests of each to effect a merger of the MSO with and into the
Subsidiary (the "Merger") as provided in Section 2.1 hereof.
NOW, THEREFORE, in consideration of the foregoing recitals
and the mutual promises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged to the full satisfaction of the parties
hereto, the parties hereto agree as follows:
ARTICLE I
MERGER
I.1 Merger; Consideration and Payment.
(a) At the Effective Time (as hereinafter defined) and
subject to the terms and conditions hereinafter set forth, the
parties hereto agree to cause the Merger to be consummated by
filing with the Delaware Secretary of State and the State
Secretary of State (if required) a Certificate of Merger (the
"Certificate of Merger") in the form required by applicable law,
duly executed and acknowledged by the Surviving Entity, and
taking all such further actions as may be required by law to make
the Merger effective. The Merger shall become effective upon the
filing of the Certificate of Merger with the Delaware Secretary
of State and the State Secretary of State (if required) (the
"Effective Time"), and the Subsidiary will be the surviving
entity.
(b) At the Effective Time, the Interests of the MSO
outstanding immediately prior to the Effective Time shall, on
such date, by virtue of the Merger and upon surrender to OMEGA of
the certificates therefor, duly endorsed and transferable, free
and clear of any liens, encumbrances, restrictions or claims of
any kind (other than those liens, encumbrances, restrictions and
claims expressly disclosed to OMEGA and affirmatively accepted by
OMEGA prior to the Effective Time), without any further action on
the part of any holder thereof, be converted into the right to
receive an aggregate consideration (the "Consideration") of:
(i) Ten Thousand Dollars ($10,000) in cash (the
"Cash Component");
(ii) One Hundred Thousand Dollars ($100,000) to be
represented by issuance to Xx. Xxxxx of shares of OMEGA common
stock ("OMEGA Stock") based on a value per share equal to the
average daily closing sales price per share of OMEGA common stock
on the NASDAQ Small Cap Market for each business day (Monday
through Friday, not including legal holidays) of the calendar
week ending on the Friday immediately preceding the date of
Closing (as hereinafter defined) rounded down to the nearest
whole number of shares (the "Stock Component"), which shall
thereupon be issued to Xx. Xxxxx, fully paid and nonassessable.
I.2 Adjustment and Audit.
(a) The Consideration is based on the value of the
Interests as determined by OMEGA from the information set forth
in the Financial Statement. At OMEGA's option, OMEGA will cause
an audit (the "Audit") of the Financial Statement and the books
and records of the Orthodontic Entity to be completed prior to
Closing to confirm the accuracy and completeness of the
information in the Financial Statement.
(b) The Consideration shall be subject to adjustments
at Closing for: (i) prepaid and underpaid rent and other lease
obligations, if any leases are to be continued after Closing, as
well as for other agreed normal and customary prepaid and
underpaid expenses; (ii) any accrued but unpaid salaries, bonuses
and other compensation, fringe and health insurance benefits,
employment or payroll taxes and related employment obligations
and (iii) any accounts payable of the Orthodontic Entity which
have accrued prior to the Effective Time and which remain unpaid
as of such time (the "Accounts Payable").
(c) The adjustments to the Consideration, if any,
shall be applied in the following order of priority; first to the
Cash Component, and the balance, if any, to the Stock Component.
I.3 Time and Place of Closing. The closing of the
transactions contemplated hereby (herein called the "Closing")
shall be held immediately before the Effective Time at the
offices of Xxxxxxxxx and Xxxxx, 0000 Xxxxxx Xxxx., Xxxxx 000,
Xxxxxx, Xxxxxxxxxx 00000-0000 on January 21, 1998, or at such
other place, date or time as may be fixed by mutual agreement of
the parties.
I.4 Filing Certificate of Merger. Contemporaneous with the
Closing, a duly executed Certificate(s) of Merger shall be filed
with the Delaware Secretary of State and the State Secretary of
State (if required).
I.5 Delivery of Records, Contracts, Interests. At the
Closing Xx. Xxxxx shall deliver or cause to be delivered to the
Subsidiary:
(a) All of the MSO's minute books, stock records and
other company books and records and the MSO's leases, contracts,
employment agreements, non-compete agreements, commitments and
rights, with such consents to the Merger as are necessary to
assure the Subsidiary of the full benefit of the same.
(b) Evidence of malpractice insurance coverage for Xx.
Xxxxx for the current and five (5) prior years.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
The Representations and Warranties of Xx. Xxxxx, the MSO and
the Orthodontic Entity in the attached Schedule 1 are hereby
incorporated as if fully set forth herein. The Representations
and Warranties of OMEGA and the Subsidiary in the attached
Schedule 2 are hereby incorporated as if fully set forth herein.
Capitalized words and expressions used in this Agreement and
which are defined in said Schedules 1 and 2 shall have the same
meaning as they are given therein.
ARTICLE III
COVENANTS OF XX. XXXXX, THE MSO
AND THE ORTHODONTIC ENTITY
Xx. Xxxxx, the MSO and the Orthodontic Entity hereby
covenant and agree with OMEGA and the Subsidiary as follows:
III.1 Conduct of Business. Between the date of this
Agreement and the Closing, they will do the following, unless
OMEGA shall otherwise consent in writing:
(a) conduct the business of the Orthodontic Entity and
the MSO only in the ordinary course, and refrain from changing or
introducing any method of management or operations except in the
ordinary course of business and consistent with prior practices;
(b) refrain from making any purchase, sale or
disposition of any asset or property other than in the ordinary
course of business, from purchasing any capital asset costing
more than $1,000 and from mortgaging, pledging, subjecting to a
lien or otherwise encumbering any of the Interests, the Property
or other assets of the Orthodontic Entity or the MSO;
(c) refrain from incurring any contingent or fixed
obligations or liabilities except those that are usual and normal
in the ordinary course of business;
(d) refrain from making any change or incurring any
obligation to make a change in the Charter or By-laws of the
Orthodontic Entity or the MSO (certified copies of which are
attached hereto as Exhibit C and Exhibit F, respectively)or
authorized or issued capital stock, except as contemplated by
this Agreement;
(e) refrain from declaring, setting aside or paying
any dividend or making any other distribution in respect of
capital stock, or making any direct or indirect redemption,
purchase or other acquisition of capital stock, of the
Orthodontic Entity or the MSO;
(f) use their best efforts to keep intact their
respective business organizations, to keep available their
present agents and employees and to preserve the goodwill of all
patients, suppliers, and others having business relations with
them;
(g) not commit or fail to commit any act which would
cause Xx. Xxxxx or the Orthodontic Entity to suffer the
revocation, suspension or limitation of Xx. Xxxxx'x or the
Orthodontic Entity's license; and
(h) permit OMEGA and its authorized representatives to
have full access to all their properties, assets, records, tax
returns, company records, contracts and documents and furnish to
OMEGA or its authorized representatives such financial and other
information with respect to their business or properties as OMEGA
may from time to time reasonably request.
III.2 Authorization from Others. Prior to the Closing,
they will have obtained all assignments, authorizations, consents
and permits of others required to permit the consummation by Xx.
Xxxxx, the MSO and the Orthodontic Entity of the transactions
contemplated by this Agreement.
III.3 Breach of Representations and Warranties.
Promptly upon becoming aware of the actual, impending or
threatened occurrence of any event which would cause or
constitute a breach, or would have caused or constituted a breach
had such event occurred or been known to them prior to the date
hereof, of any of their representations and warranties contained
in or referred to in this Agreement, they shall give detailed
written notice thereof to OMEGA and shall use their best efforts
to prevent or promptly remedy the same.
III.4 Consummation of Agreement. Each shall use his,
her or its best efforts to perform and fulfill all conditions and
obligations on his, her or its part to be performed and fulfilled
under this Agreement, to the end that the transactions
contemplated by this Agreement shall be fully carried out.
ARTICLE IV
COVENANTS OF OMEGA
AND THE SUBSIDIARY
OMEGA and the Subsidiary each hereby covenants and agrees
with Xx. Xxxxx and the Orthodontic Entity as follows:
IV.1 Authorization from Others. Prior to the Closing, OMEGA
will have obtained and will have caused the Subsidiary to have
obtained all authorizations, consents and permits of others
required to permit the consummation by it and the Subsidiary of
the transactions contemplated by this Agreement.
IV.2 Consummation of Agreement. OMEGA and the Subsidiary
shall use their best efforts to perform and fulfill all
conditions and obligations on their respective parts to be
performed or fulfilled under this Agreement, to the end that the
transactions contemplated by this Agreement shall be fully
carried out.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF OMEGA AND THE SUBSIDIARY
The obligations of OMEGA and the Subsidiary to consummate
this Agreement and the transactions contemplated hereby are
subject to the condition that on or before the Closing the
actions required by this Article V will have been accomplished.
V.1 Representations; Warranties; Covenants. (i) Each of
the representations and warranties of the Orthodontic Entity, the
MSO and Xx. Xxxxx contained in Schedule 1 shall be true and
correct as though made on and as of the Closing, (ii) Xx. Xxxxx,
the MSO and the Orthodontic Entity shall have performed all of
their, his or its obligations hereunder which by the terms hereof
are to be performed on or before the Closing, and (iii) Xx.
Xxxxx, the MSO and the Orthodontic Entity shall have delivered to
OMEGA a certificate, dated the date of Closing, to such effect,
in form and substance satisfactory to OMEGA.
V.2 Orthodontic Entity. Xx. Xxxxx shall have furnished:
(i) a certificate of the State Secretary of State as to the legal
existence and professional corporation good standing of the
Orthodontic Entity and the Delaware Secretary of State as to the
legal existence and good standing of the MSO; and (ii) a copy of
the resolutions adopted by the board of directors and
stockholders of the Orthodontic Entity and the MSO, in each case
authorizing and approving this Agreement, the Management Services
Agreement and the Stock Put/Call Option and Successor Designation
Agreement.
V.3 Other Agreements. Xx. Xxxxx shall have executed and
delivered, and shall have caused the Orthodontic Entity and the
MSO to execute and deliver, to OMEGA a Management Services
Agreement and a Stock Put/Call Option and Successor Designation
Agreement, each having substantially the terms and conditions of
the forms collectively attached hereto as Exhibit D .
V.4 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for OMEGA
is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
V.5 Notices. The Orthodontic Entity shall, at OMEGA's
expense, notify all of its patients and obligors of accounts
receivable, and third party payors and others designated by OMEGA
of the Merger and the other transactions contemplated hereunder
pursuant to notices substantially in the form collectively
attached hereto as Exhibit B.
V.6 Financial Condition. The financial condition of the
Orthodontic Entity and the MSO shall not be materially adversely
different from the Financial Statement, as determined by OMEGA.
During the period from the date of the Financial Statement to the
Closing, there shall not have been any material adverse change in
the financial condition, results of operations, business or
prospects of the Orthodontic Entity or the MSO, nor any material
loss or damage to their respective assets, whether or not
insured, which materially affects the ability of the Orthodontic
Entity or the MSO to conduct its business. The Orthodontic
Entity and the MSO shall have delivered to OMEGA a certificate,
dated the date of Closing, to the foregoing effect, and further
to the effect that there are no Accounts Payable or other
liabilities as of the date of Closing that are not reflected on
the Financial Statement other than those which have been
disclosed in writing to and accepted in writing by OMEGA and
which were incurred since the date of the Financial Statement in
the ordinary course of business.
V.7 Due Diligence. OMEGA, acting in good faith and in its
sole discretion, shall be reasonably satisfied with the results
of its "Due Diligence" on Xx. Xxxxx, the Orthodontic Entity and
the MSO as not reflecting any data or information which
individually or in the aggregate, if previously disclosed, would
have indicated that there was a material adverse change in the
business of the Orthodontic Entity or the MSO or in the condition
or prospects (financial or otherwise) of the assets, properties,
operations, patients, employees or equipment of the business of
the Orthodontic Entity or the MSO from the information provided
prior to the date hereof. As used herein, Due Diligence shall
mean, without limitation, the results of the Audit of the
Financial Statement and of all other matters (financial or
otherwise) related to, or otherwise deemed material by OMEGA
regarding, Xx. Xxxxx, the MSO and the Orthodontic Entity,
including location of the Orthodontic Offices and its
demographics, the leases, the Equipment, insurance, licensing,
malpractice issues, liabilities, compliance with laws and
regulations and health surveys.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE
MSO, ORTHODONTIC ENTITY AND XX. XXXXX
The obligations of the Orthodontic Entity, the MSO and Xx.
Xxxxx to consummate this Agreement and the transactions
contemplated hereby are subject to the condition that on or
before the Closing the actions required by this Article VI will
have been accomplished.
VI.1 Representations; Warranties; Covenants. Each of the
representations and warranties of OMEGA contained in Schedule 2
shall be true and correct as though made on and as of the Closing
and OMEGA and the Subsidiary shall have performed all of their
obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
VI.2 Absence of Certain Litigation. There shall not be any
injunction, restraining order or order of any nature issued by
any court of competent jurisdiction which directs that this
Agreement or any material transaction contemplated hereby shall
not be consummated as herein provided, or suit, action or other
proceeding which in the reasonable opinion of counsel for Xx.
Xxxxx is likely to result in the restraint or prohibition of the
consummation of any material transaction contemplated hereby.
ARTICLE VII
OBLIGATIONS AFTER CLOSING
VII.1 OMEGA Exceptional Practice and the Report
Suggestions. On and after the Closing, Xx. Xxxxx agrees to cause
the Orthodontic Entity to implement the suggestions in the Report
and the concepts of OMEGA's Exceptional Practice.
VII.2 Books and Records. OMEGA shall permit Xx. Xxxxx,
his accountants and attorneys, reasonable access to books and
records of the Orthodontic Entity for the purpose of preparing
such tax returns of Xx. Xxxxx as may be required after the
Closing and for other proper purposes approved by OMEGA.
VII.3 License. Xx. Xxxxx shall maintain all licenses
necessary to practice orthodontics in the State. Xx. Xxxxx shall
not commit or fail to commit any act which would cause Xx. Xxxxx
or the Orthodontic Entity to suffer the revocation, suspension or
limitation of Xx. Xxxxx'x or the Orthodontic Entity's license.
ARTICLE VIII
INDEMNIFICATION
VIII.1 Indemnification By Xx. Xxxxx. Subject to the
limitations set forth in Section 8.3, Xx. Xxxxx agrees to defend,
indemnify and hold OMEGA and the Subsidiary harmless from and
against any damages, liabilities, losses and expenses (including
reasonable counsel fees) of any kind or nature whatsoever which
may be sustained or suffered by OMEGA or the Subsidiary based
upon a breach of any representation, warranty or covenant made by
the Orthodontic Entity, the MSO or Xx. Xxxxx in this Agreement or
in any exhibit, certificate, schedule or financial statement
delivered hereunder, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or
thing covered by such representations, warranties or covenants.
VIII.2 Indemnification By OMEGA. Subject to the
limitations set forth in Section 8.3, OMEGA agrees to defend,
indemnify and hold Xx. Xxxxx harmless from and against any
damages, liabilities, losses and expenses (including reasonable
counsel fees) of any kind or nature whatsoever which may be
sustained or suffered by Xx. Xxxxx based upon a breach of any
representation, warranty or covenant made by OMEGA or the
Subidiary in this Agreement or in any exhibit, certificate,
schedule or financial statement delivered hereunder, or by reason
of any claim, action or proceeding asserted or instituted growing
out of any matter or thing covered by such representations,
warranties or covenants.
VIII.3 Exclusions. Notwithstanding Sections 8.1 and 8.2:
(a) no indemnification shall be payable to the extent
any claim is covered by insurance; and
(b) no indemnification shall be payable with respect
to claims asserted more than five (5) years after the Closing.
VIII.4 Notice: Defense of Claims. Prompt written notice
of each claim for indemnification hereunder shall be given to the
other party, specifying the amount and nature of the claim, and
of any matter which in the opinion of the claimant is likely to
give rise to an indemnification claim. The indemnifying party
shall have the right to participate at its own expense in the
defense of any such matter or its settlement. If, in the opinion
of the indemnified party, its financial condition or business
would not be impaired thereby, such party may authorize the
indemnifying party to take over the defense of such matter so
long as such defense is expeditious. Failure to give notice of a
matter which may give rise to an indemnification claim shall not
affect the rights of any party to collect such claim from the
other party.
VIII.5 Payment of Claims; Alternative Dispute Resolution.
(a) Indemnification claims by OMEGA or the Subsidiary
shall be paid or otherwise satisfied by Xx. Xxxxx within 30 days
after notice thereof is given by OMEGA or the Subsidiary,
respectively. In the event Xx. Xxxxx indicates in a writing
delivered to OMEGA or the Subsidiary that he disputes the nature
or amount of the claim, the dispute shall, upon the election of
any party hereto after said 30-day period, be settled in
accordance with Section 8.5(b).
(b) If a dispute arises under this Agreement that
cannot be resolved informally by the parties, any party may
invoke the procedures set forth in Exhibit E hereto and the
parties agree to use these procedures, except paragraph (c) of
this Section 8.5, prior to any party pursuing other available
remedies. The parties will meet and attempt in good faith to
resolve any controversy or claim arising out of or relating to
this Agreement.
(c) Notwithstanding anything in this Section 8.5 to
the contrary, nothing shall preclude any party from seeking a
preliminary injunction or other provisional relief, either prior
to or during the proceeding provided for in this section, if in
its judgment such action is necessary to avoid irreparable damage
or to preserve the status quo.
ARTICLE IX
MISCELLANEOUS
IX.1 Termination. At any time prior to the Closing, this
Agreement may be terminated (i) by mutual consent of the parties
with the approval of their respective board of directors or
members, (ii) by any party if there has been a material
misrepresentation, breach of warranty or breach of covenant by
another party in its representations, warranties and covenants
set forth herein, (iii) by OMEGA if the conditions stated in
Article V have not been satisfied at or prior to the Closing, or
(iv) by Xx. Xxxxx if the conditions stated in Article VI have not
been satisfied at or prior to the Closing.
IX.2 Survival of Warranties and Other Obligations. All
representations, warranties, agreements, covenants and
obligations herein or in any schedule, exhibit, certificate or
financial statement delivered by any party to another party
incident to the transactions contemplated hereby are material,
shall be deemed to have been relied upon by the other party and
shall survive the Closing regardless of any investigation and
shall not merge in the performance of any obligation by any party
hereto.
IX.3 Fees and Expenses. Each of the parties will bear its
or his own expenses in connection with the negotiation and the
consummation of the transactions contemplated by this Agreement.
IX.4 Notices. Any notice or other communication in
connection with this Agreement shall be deemed to be delivered if
in writing (or in the form of a telegram or facsimile
transmission) addressed as provided below and if either
(a) actually delivered at said address, or (b) in the case of a
letter, three business days shall have elapsed after the same
shall have been deposited in the United States mail, postage
prepaid and registered or certified, return receipt requested, or
sent by reputable overnight courier:
If to Xx. Xxxxx, the MSO or the Orthodontic Entity, to:
Xxxxxx Xxxxx, D.D.S.
00000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
If to OMEGA or Subsidiary, to:
Omega Orthodontics, Inc.
0000 Xxxxxx Xxxx Xxxx
Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx
and in any case at such other address as the addressee shall have
specified by written notice. All periods of notice shall be
measured from the date of delivery thereof.
IX.5 Entire Agreement. This Agreement (including all
exhibits or schedules appended to this Agreement and all
documents delivered pursuant to the provisions of this Agreement,
all of which are hereby incorporated herein by reference)
together with the Letter of Intent, the Management Services
Agreement and the Stock Put/Call Option and Successor Designation
Agreement (including all exhibits and schedules thereto), taken
together, constitute the entire agreement between the parties,
and all promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof and
inducements to the making of this Agreement relied upon by any
party hereto, have been expressed herein or therein.
IX.6 Binding Agreement, Successors. This Agreement shall be
binding upon, and shall be enforceable by and inure to the
benefit of, the parties named herein and their respective
successors and assigns; provided, however, that this Agreement
may not be assigned by any of the parties without the prior
written consent of all the other parties; provided, however, that
OMEGA shall be permitted to assign its rights and obligations
hereunder without the consent of the other parties hereto to any
person, firm or corporation controlled by OMEGA, controlling
OMEGA or under common control with OMEGA.
IX.7 Confidentiality. As used herein, "Confidential
Information" means any information or data that a party has
acquired from another party that is confidential or not otherwise
available to the public, whether oral or written, including
without limitation any analyses, computations, studies or other
documents prepared from such information or data by or for the
directors, officers, employees, agents or representatives of such
party (collectively, the "Representatives"), but excluding
information or data which (i) became available to the public
other than as a result of such party's violation of this
Agreement, (ii) became available to such party from a source
other than the other party if that source was not bound by a
confidentiality agreement with such other party and such source
lawfully obtained such information or data, or (iii) is required
to be disclosed by applicable law, provided that promptly after
being compelled to disclose any such information or data, the
party being so compelled shall provide prompt notice thereof to
the other party so that such other party may seek a protective
order or other appropriate remedy. Each party covenants and
agrees that it and its Representatives shall keep confidential
and shall not disclose all Confidential Information, except to
its Representatives, counsel and lenders who need to know such
information and agree to keep it confidential. Each party shall
be responsible for any breach of this provision by its
Representatives. In the event that the Closing does not occur,
each party will promptly return to the other all copies of such
other party's Confidential Information.
IX.8 Governing Law; Severability. This Agreement shall be
deemed a contract made under the laws of the State of Delaware
and, together with the rights and obligations of the parties
hereunder, shall be construed under and governed by the laws of
such state. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability
of any other provision hereof.
IX.9 Referrals. Nothing in this Agreement shall be
construed as an offer or payment to the other party or any
affiliate of the other party of any cash or other remuneration
whether directly or indirectly, overtly or covertly, specifically
for patient referrals or for recommending or arranging the
purchase, lease or order of any item or service. The
Consideration to be received upon consummation of the Merger
represents the fair market value of the MSO and is not in any way
related to or dependent upon referrals by and among OMEGA, the
Orthodontic Entity, the Subsidiary and Xx. Xxxxx.
IX.10 Further Assurances. Following the execution of
this Agreement, Xx. Xxxxx, the Orthodontic Entity, OMEGA and the
Subsidiary each agree:
(a) to deliver such other instruments of title,
certificates, consents, endorsements, assignments, assumptions
and other documents or instruments, in form reasonably acceptable
to the party requesting the same and its counsel, as may be
reasonably necessary to carry out and/or to comply with the terms
of this Agreement, and the transactions contemplated herein;
(b) to confer on a regular basis with the other,
report on material operational matters and promptly advise the
other orally or in writing of any change or event resulting in or
which, insofar as can reasonably be foreseen could result in, a
material adverse effect on such party or which would cause or
constitute a material breach of any of the representations,
warranties or covenants of such party contained herein; and
(c) to provide the other (or its counsel) promptly
with copies of all filings made by such party with any state or
federal governmental entity in connection with this Agreement or
the transactions contemplated hereby.
IX.11 Counterparts; Section Headings; Gender. This
Agreement may be executed, accepted and delivered in any number
of counterparts, but all counterparts shall together constitute
but one and the same instrument. The underlined section headings
are inserted for convenience of reference only and are not to be
construed as part of this Agreement. The use of the masculine or
neuter gender includes each of the other genders.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the date set forth above by their
duly authorized representatives.
OMEGA ORTHODONTICS OF
WOODLAND HILLS, INC.
By /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, Its President
Duly Authorized
OMEGA ORTHODONTICS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Its President and Chief Executive
Officer
Duly Authorized
AZANI DENTAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, Its President
Duly Authorized
XXXXXX XXXXX, D.D.S, INC.
By: /s/ Xxxxxx Xxxxx, D.D.S.
Xxxxxx Xxxxx, D.D.S., Its President
Duly Authorized
/s/ Xxxxxx Xxxxx, D.D.S.
Xxxxxx Xxxxx, D.D.S.
Exhibit A
Financial Statement
Exhibit B
Notices
Exhibit C
Orthodontic Entity's Charter and
By-Laws
Exhibit D
Draft Management Services Agreement and
Stock Put/Call Option and Successor Designation Agreement
Exhibit E
Alternative Dispute Resolution Procedures
A. Method of Invoking ADR Procedures
1. These procedures may be invoked by any party to an
agreement which incorporates these procedures by giving written
notice to the other of the dispute and designating a person with
decision-making authority (the "representative") to act on behalf
of the disputing party regarding the dispute. The other party
shall be required to respond to the disputing party's notice
within five (5) business days by designating in writing its own
representative. A party may choose more than one person to
represent it. If a party appoints only one representative, one
or more of its officers may nonetheless attend such meetings.
2. The parties, each acting through its representative,
shall meet at a mutually acceptable time and place within five
business days after the non-disputing party designates its
representative to the other. At that meeting, the parties shall
attempt in good faith to negotiate a resolution of the dispute,
or failing that, to agree on a method for resolving the claim or
dispute.
3. If, within ten (10) business days after the first
meeting or within such longer period of time as the parties may
mutually agree, the parties have not succeeded in negotiating a
resolution of the claim or dispute or agreeing on a dispute
resolution mechanism, they shall submit the dispute to mediation
in accordance with the procedures set forth herein.
4. The parties will jointly appoint a mutually acceptable
mediator to mediate the dispute. If the parties are unable to
agree on a mutually acceptable mediator within five (5) days
after the conclusion of the negotiations described in paragraph 3
above, then the parties shall select a neutral third party with
the assistance of the American Arbitration Association, unless
the parties agree otherwise in finding a mutually acceptable
mediator.
5. Each party to a dispute shall bear an equal share of
the fees and costs of the mediator and any fees and costs of the
American Arbitration Association.
6. The parties agree to participate in good faith in the
mediation and negotiations related thereto for a period of thirty
(30) days from appointment of a mediator by any of the parties or
the American Arbitration Association.
B. Mediation procedures
1. The mediator shall be neutral and impartial.
2. The mediator shall control the procedural aspects of
the mediation. The parties will cooperate fully with the
mediator.
(a) The mediator is free to meet and
communicate separately with each party.
(b) The mediator will decide when to
hold joint meetings with the parties and when to
hold separate meetings. There shall be no
stenographic record of any meeting. Formal rules
of evidence will not apply.
(c) The mediator may request that there
be no direct communication between the parties or
between their attorneys without the concurrence of
the mediator.
3. Each party may be represented by more than one person,
e.g., one or more of its officers and an attorney. Each party
will have a representative fully authorized to negotiate a
settlement of the dispute present.
4. The process will be conducted expeditiously.
5. The mediator will not transmit information received
from any party to another party or any third person unless
authorized to do so by the party transmitting the information.
6. The entire process is confidential. The parties and
the mediator will not disclose information regarding the process,
including settlement terms, to third persons, unless the parties
otherwise agree. The process shall be treated as a compromise
negotiation for purposes of the Federal Rules of Evidence and
state rules of evidence.
7. The parties will refrain from pursuing administrative
and/or judicial remedies during the mediation process, except as
otherwise expressly provided in the agreement which incorporates
these procedures.
8. Unless all parties and the mediator otherwise agree in
writing,
(a) The mediator will be disqualified
as a witness, consultant or expert in any pending
or future investigation, action or proceeding
relating to the subject matter of the mediation
(including any investigation, action or proceeding
which involves persons not party to this
mediation); and
(b) The mediator and any documents and
information in the mediator's possession will not
be subpoenaed in any such investigation, action or
proceeding, and all parties will oppose any effort
to have the mediator and documents subpoenaed.
9. If the dispute goes into arbitration, the mediator
shall not serve as an arbitrator, unless the parties and the
mediator otherwise agree in writing.
10. The mediator, if a lawyer, may freely express views to
the parties on the legal issues of the dispute.
11. The mediator shall not be liable for any act or
omission in connection with the mediation.
12. The mediator may withdraw at any time by written notice
to the parties (i) for overriding personal reasons, (ii) if the
mediator believes that a party is not acting in good faith, or
(iii) if the mediator concludes that further mediation efforts
would not be useful.
C. Binding Arbitration
If the parties do not resolve the dispute through mediation
within the period provided in Part A above, the parties shall
submit the matter to binding arbitration in Los Angeles,
California before a qualified sole arbitrator in accordance with
the then current commercial arbitration rules of the American
Arbitration Association. The sole arbitrator shall be agreed
upon by the parties within twenty (20) days after either party
elects to submit any issue to arbitration or, failing that, shall
be selected by the American Arbitration Association. A qualified
arbitrator is one who is familiar with the principal subject
matter of the issues to be arbitrated such as by way of example,
healthcare services industry matters, management consulting
services generally or business law/corporate matters generally.
Judgment upon the award rendered by the arbitrator may be entered
in any court having jurisdiction. The arbitrator shall not have
the authority to award multiple, punitive or consequential
damages under any circumstances.
Exhibit F
MSO's Charter and By-Laws
Schedule 1
Representations and Warranties of
Xx. Xxxxx, the MSO and the Orthodontic Entity to OMEGA
and the Subsidiary
Each of Xxxxxx Xxxxx, D.D.S., Inc., a California
professional dental corporation (the "Orthodontic Entity"), Azani
Dental Services, Inc., a Deleware corporation (the "MSO") and
Xxxxxx Xxxxx, D.D.S. ("Xx. Xxxxx") hereby represent and warrant
to Omega Orthodontics, Inc., a Delaware corporation ("OMEGA") and
Omega Orthodontics of Woodland Hills, Inc., a Delaware
corporation (the "Subsidiary") as follows (all capitalized terms
used in this Schedule and not otherwise defined in this Schedule
shall have the respective meanings given to such terms in the
Affiliation Agreement and Agreement and Plan of Merger, entered
into as of January 21, 1998, by and among the Subsidiary, OMEGA,
the MSO, Xx. Xxxxx and the the Orthodontic Entity (the
"Agreement")):
1. Organization and Qualification of the Orthodontic
Entity. The Orthodontic Entity is a duly formed and organized
professional corporation under the laws of the State. The
Orthodontic Entity is a legally existing professional corporation
under the State Professional Corporation Act (the "Act") and no
event has occurred which alone or after the passage of time would
result in the dissolution of the Orthodontic Entity. The
Orthodontic Entity has the full power to conduct business as
currently conducted by the Orthodontic Entity and to own and
lease the property it purports to own or lease, as the case may
be. The copies of any articles of organization or incorporation
and by-laws, as defined in the Act, of the Orthodontic Entity
which are currently in effect, and all amendments thereto
(collectively, the "Orthodontic Entity's Charter and By-Laws"),
certified by Xx. Xxxxx and attached to the Agreement as Exhibit C
are complete and correct.
2. Organization of the MSO. The MSO is a corporation duly
organized, validly existing and in good standing under the laws
of Delaware with full corporate power to own or lease its
properties and to conduct its business in the manner and in the
places where such properties are owned or leased or such business
is conducted by it. The copies of any articles of organization
or incorporation and by-laws of the MSO which are currently in
effect, and all amendments thereto (collectively, the "MSO's
Charter and By-Laws" and, together with the Orthodontic Entity's
Charter and By-Laws, the "Charter and By-Laws"), certified by Xx.
Xxxxx and attached to the Agreement as Exhibit F are complete and
correct.
3. Authorization of Transaction. All necessary action,
corporate or otherwise, has been taken by the Orthodontic Entity
and the MSO to authorize the execution of the Agreement by Xx.
Xxxxx on behalf of the Orthodontic Entity and the MSO,
respectively, and the delivery and performance of the Agreement
and the transactions contemplated thereby, and the Agreement is
the valid and binding obligation of the Orthodontic Entity, Xx.
Xxxxx and the MSO enforceable against each of the Orthodontic
Entity, Xx. Xxxxx and the MSO in accordance with its terms.
4. Present Compliance with Obligations and Laws. Except
as disclosed on Exhibit X attached to this Schedule, there is
not: (a) any violation of the Charter or By-Laws; (b) a default
in the performance of any obligation, agreement or condition of
any debt instrument from Xx. Xxxxx, the Orthodontic Entity or
the MSO which (with or without the passage of time or the giving
of notice) affords to any person the right to accelerate any
material indebtedness or terminate any right; (c) a default of or
breach of (with or without the passage of time or the giving of
notice) any other contract to which Xx. Xxxxx, the Orthodontic
Entity or the MSO is a party or by which their assets are bound;
or (d) any violation of any law, regulation, administrative order
or judicial order applicable to Xx. Xxxxx, the Orthodontic Entity
or the MSO, or any of their business or assets.
5. No Conflict of Transaction With Obligations and Laws.
(a) Neither the execution, delivery and performance of
the Agreement, nor the performance of the transactions
contemplated thereby, will: (i) constitute a breach or violation
of the Orthodontic Entity's or the MSO's Charter or By-Laws; (ii)
conflict with or constitute (with or without the passage of time
or the giving of notice) a breach of, or default under, any debt
instrument to which Xx. Xxxxx, the Orthodontic Entity or the MSO
is a party, or give any person the right to accelerate any
indebtedness or terminate any right; (iii) constitute (with or
without the passage of time or giving of notice) a default under
or breach of any other agreement, instrument or obligation to
which the Orthodontic Entity, Xx. Xxxxx or the MSO is a party or
by which any of their assets are bound; or (iv) result in a
violation of any law, regulation, administrative order or
judicial order applicable to the Orthodontic Entity, Xx. Xxxxx or
the MSO, or any of their business or assets.
(b) Except as disclosed on the attached Exhibit X to
this Schedule, the execution, delivery and performance of the
Agreement and the transactions contemplated thereby by the
Orthodontic Entity, Xx. Xxxxx or the MSO do not require the
consent, waiver, approval, authorization, exemption of or giving
of notice to any governmental authority or other third party.
6. Investigations and Licenses.
(a) The Orthodontic Entity and Xx. Xxxxx have all
necessary licenses to practice orthodontics in the State.
(b) Neither the Orthodontic Entity nor Xx. Xxxxx is
subject to any investigation, whether threatened, current or
pending, under which the Orthodontic Entity or Xx. Xxxxx may be
required to forfeit or suffer the revocation, suspension or
limitation of Xx. Xxxxx'x or the Orthodontic Entity's license to
practice orthodontics and neither the Orthodontic Entity nor Xx.
Xxxxx is subject to any investigation, whether threatened,
current or pending, by a commercial third-party payor.
7. Financial Statement. Attached as Exhibit A to the
Agreement is the Financial Statement of the Orthodontic Entity.
To the best knowledge of Xx. Xxxxx and the Orthodontic Entity,
the Financial Statement is complete and correct and fairly
presents in all material respects the financial position of the
Orthodontic Entity as at the date of such statement and the
results of its operations for the period then ended, in
accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby for
the periods covered thereby.
8. Capitalization and the Interests. The authorized
capital of the MSO consists of the Interests. All of the
Interests have been validly issued and are fully paid and non-
assessable. There are no options, warrants, rights or other
agreements or commitments obligating the Orthodontic Entity or
Xx. Xxxxx to issue or sell the Interests and there are no pre-
emptive rights with respect to any Interests. Xx. Xxxxx is the
beneficial and record owner of all of the Interests. Xx. Xxxxx
has good and marketable title to the Interests, free and clear of
any liens, encumbrances, restrictions, or claims of any kind.
The Interests are not subject to any voting or similar agreement.
9. Property; Liens; Condition.
(a) Except as set forth on Exhibit X to this Schedule,
the Orthodontic Entity and the MSO have good and marketable title
in fee simple to all of their owned real and personal property,
including without limitation, all machinery and equipment used or
owned by the Orthodontic Entity, and all machinery and equipment
owned by the MSO and used by the Orthodontic Entity (the
"Equipment") free of liens, encumbrances, restrictions or claims
of any kind (the "Property"). All the Property owned or leased
by the Orthodontic Entity and the MSO is in good repair, has
been well maintained, and substantially conforms with all
applicable ordinances, regulations and zoning or other laws. The
Equipment is in good working order.
(b) No entity or person other than the MSO and the
Orthodontic Entity owns any of the assets necessary for the
operation of the Orthodontic Entity. The Orthodontic Entity does
not operate any of its practice through any other entities or
persons.
10. Payment of Taxes. The Orthodontic Entity and the MSO
have filed all federal, state and local income, excise or
franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and other tax returns required
to be filed and have paid all taxes owing except taxes which have
not yet accrued or otherwise become due for which adequate
provision has been made in the Financial Statement. All
transfer, excise or other taxes payable by reason of the Merger
pursuant to the Agreement shall be paid or provided for by Xx.
Xxxxx after the Closing out of the Consideration to be received
upon consummation of the Merger.
11. Absence of Undisclosed Liabilities and Changes.
(a) As of the date of the Financial Statement, the
Orthodontic Entity had no liabilities of any nature, whether
accrued, absolute, contingent or otherwise (including without
limitation liabilities as guarantor or otherwise with respect to
obligations of others, or liabilities for taxes due or then
accrued or to become due), except (i) liabilities stated or
adequately reserved against on the Financial Statement, and (ii)
liabilities disclosed in Exhibit X to this Schedule. There is no
fact which materially adversely affects, or may in the future (so
far as can now be reasonably foreseen) materially adversely
affect, the business, properties, operations or condition of the
Orthodontic Entity or the MSO which has not been specifically
disclosed in the Financial Statement or in Exhibit X to this
Schedule.
(b) Except as disclosed in Exhibit X to this Schedule,
since the date of the Financial Statement there has not been:
(i) any change in the financial
condition, properties, assets, liabilities,
business or operations of the Orthodontic
Entity or the MSO, which change by itself or
in conjunction with all other such changes,
whether or not arising in the ordinary course
of business, has been materially adverse with
respect to the Orthodontic Entity or the MSO;
(ii) any mortgage, encumbrance or
lien placed on any of the Interests or the
Property, or the property subject to any
lease, or which remains in existence on the
date hereof; or
(iii) any obligation or
liability incurred by the Orthodontic Entity
or the MSO other than obligations and
liabilities not in excess of $5,000 incurred
in the ordinary course of business.
(c) Except as described in Exhibit X to this Schedule,
there are no accounts payable of the Orthodontic Entity (not
including payroll, "Accounts Payable") that accrued prior to the
commencement date of the Agreement), and which were unpaid as of
such date. Said Exhibit X further sets forth the Accounts
Payable of the Orthodontic Entity for the last 12 months prior to
the end of the month immediately preceding the commencement date
of the Agreement.
12. Litigation. Except for matters described on Exhibit X
to this Schedule, there is no action, suit, claim, proceeding,
investigation or governmental inquiryat law or in equity, or
before or by any Federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality
pending or, to the knowledge of the Orthodontic Entity, the MSO
or Xx. Xxxxx, threatened against or involving the Orthodontic
Entity, the MSO, or Xx. Xxxxx and there is no basis for any of
the foregoing, and there are no outstanding court orders, court
decrees, or court stipulations to which the Orthodontic Entity,
the MSO, or Xx. Xxxxx is a party which question the Agreement or
affect the transactions contemplated thereby, or which will
result in any materially adverse change in the business,
properties, operations, prospects, assets or in the condition,
financial or otherwise, of Xx. Xxxxx, the MSO or the Orthodontic
Entity.
13. Insurance. Xx. Xxxxx and The Orthodontic Entity have
possessed adequate occurrence professional liability coverage for
the five (5) years prior to the date of the Agreement protecting
the Orthodontic Entity and Xx. Xxxxx from any professional
malpractice liability that might arise because of the Orthodontic
Entity's or Xx. Xxxxx'x practice activities over the preceding
five (5) years. Prior to the Closing, the Orthodontic Entity
shall have obtained and shall continue to maintain, at its cost,
Occurrence Medical Malpractice Liability Insurance for Xx. Xxxxx
and the Orthodontic Entity. The Orthodontic Entity and the MSO
possess adequate insurance coverage for their Property.
EXHIBIT X
Exceptions to Representations and
Warranties of Xx. Xxxxx and
Orthodontic Entity to OMEGA and Subsidiary
Schedule 2
Representations and Warranties of
OMEGA to Xx. Xxxxx, the MSO and the Orthodontic Entity
Omega Orthodontics, Inc., a Delaware corporation ("OMEGA")
hereby represents and warrants to Azani Dental Services, Inc., a
Delaware corporation ("the MSO"), Xxxxxx Xxxxx, D.D.S., Inc., a
California professional dental corporation (the "Orthodontic
Entity") and Xxxxxx Xxxxx, D.D.S. "(Xx. Xxxxx") as follows:
1. Organization of OMEGA. That it and Omega Orthodontics
of Woodland Hills, Inc., a Delaware corporation (the
"Subsidiary") are corporations duly organized, validly existing
and in good standing under the laws of Delaware with full
corporate power to own or lease their properties and to conduct
their business in the manner and in the places where such
properties are owned or leased or such business is conducted by
them.
2. Authorization of Transaction. All necessary action,
corporate or otherwise, has been taken by it and the Subsidiary
to authorize the execution, delivery and performance of the
Affiliation Agreement and Agreement and Plan of Merger, entered
into as of January 21, 1998, by and among OMEGA, the Orthodontic
Entity, the Subsidiary, the MSO and Xx. Xxxxx (the "Agreement"),
and the Agreement is a valid and binding obligation of it and the
Subsidiary enforceable against them in accordance with its terms.
3. Litigation. There is no litigation pending or, to its
knowledge, threatened against it which would prevent or hinder
the consummation of the transactions contemplated by the
Agreement.
